Reporters Corey Mitchell and Denisa R. Superville discuss and analyze what's happening in the nation's school districts and dissect trends in education leadership and management.

School Boards Give Superintendents Hefty Severance Packages to Quit Early

By Denisa R. Superville on
May 11, 2017 10:14 AM

UPDATED

When school boards offer hefty buy-out packages to get rid of superintendents with whom they no longer see eye-to-eye, do taxpayers get the shaft?

It depends.

Let's look at the most recent case.

A bitter, months-long power struggle between the Howard County, Md., school board and its superintendent, Renee Foose, ended this month when the board approved a nearly $1.65 million severance package in exchange for Foose's resignation with three years left on her contract.

Eye-popping parachute packages are not uncommon in the corporate world, where CEOs and top executives snag multimillion-dollar payouts as they walk out the door. But school districts—where officials are charged with being responsible stewards of public money and in charge of managing resources within very constrained budgets—have also been giving out hefty severance packages to superintendents for them to go away early.

The reasons for the splits vary. Often, there is a divergence in philosophy between the superintendent and the school board, particularly after school board elections bring in new members. Superintendents may not be hitting agreed upon benchmarks and targets. Sometimes, the break-ups come amid investigation and allegations of wrongdoing, and school boards—weighing potential costs and liabilities down the road—decide it's better for the district to pay money upfront and move on.

Sometimes things just don't work out even after careful vetting of a superintendent-candidate, and that can happen whether it's a school board or a corporation, said Thomas Gentzel, the executive director and CEO of the National School Boards Association.

"I think it's always good advice for a school board—any board of directors or anybody who is hiring a CEO&dash;to be thinking about the potential implications if things don't work out. What are the potential cost implications?" Gentzel said.

"That's a fair question. ...When a board makes its decision, it inevitably is going to make the decision in light of, or at least with full consideration of, the financial implications to the organization. But it's a cost-benefit question, and it's a judgment call so that the board is saying, 'yes it will cost us X dollars to do this, but there is a bigger cost...if we don't do it.' "

Districts of all sizes have paid hefty severance packages. Of course, what's considered a large compensation package is also relative, based on a number of factors including stipulations in the superintendent's contract, how much he or she was being paid, and a district's size and budget.

Florida's Hillsborough County fired its superintendent, MaryEllen Elia, in 2015, while she was a finalist for the AASA's National Superintendent of the Year Award. The Tampa Bay Times reported that Elia's severance package topped $1 million.

Large payouts to superintendents with multiple years left on their contracts are unusual, but have been happening with more frequency in recent years, said Daniel A. Domenech, the executive director of the AASA, the School Superintendents Association.

"It's unusual because boards have to consider the potential backlash that they will get from the community when they pay out that kind of money to a superintendent who is entitled to it," Domenech said. "That's the problem—that's why there are contracts. And when those contracts are terminated unilaterally by the board, then they have to pay the price, and the price, unfortunately, is very high."

The length of superintendents' contracts, how much they will be paid, and reasons why they can be fired are often covered in their employment agreements. In a 2016 survey on superintendent salaries, less than a quarter—23.2 percent—of superintendents who responded said that their contracts contained severance or buyout clauses. When boards fire superintendents for reasons not specified in contracts, they often have to pay a lot of money.

"The reality is that there apparently is no cause," Domenech said. "I am sure if they could have come up with one, they would have."

In Texas, the state can reduce state foundation funding if the payout is more than a year's salary and benefits agreed to in the superintendent's contract. The state reduces funds that are equivalent to the amount when a district exceeds what's specified in the contract. But that's not stopped districts from doing so. According to the state's legislative budget board, between 2011 and 2015, the state to withheld $1.5 million in foundation school program funds from districts that exceeded the cap.

Despite the eye-popping numbers that grab headlines, Domenech and Gentzel say that the vast majority of school boards and superintendents work in comity and part ways amicably. The relationship between those two parties is one of the most critical in a school district, they said.

The more-common scenario when supes and boards part ways is to pay the schools chief for accrued sick time, vacation days, pensions and other stipulations in the contract, Domenech said. But even those settlements can surpass $200,000 in some cases.

How do school board avoid getting to this break-up point that may leave their districts on the hook for hundreds of thousands or even millions of dollars?

Gentzel said boards should rely on legal counsel with expertise in education law. Superintendents and board members should spend time together to build relationships and understand and respect each other's roles and responsibilities.

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